Considering all the time and effort required to put money and equity aside for the future, the ultimate disposition of those funds should not be left to chance. Your assets need first to be available to you and your family during your lifetime. We can assist you in this process, as well as providing for your family and friends after your death.
In the absence of your preparing an estate plan in the form of a Will or Trust, state law will control just how your assets will be distributed. Further, an estate plan can help reduce or eliminate taxes and can provide for ease of administration by the person or institution you choose.
Wills operate on assets solely owned by the decedent and serve as instructions on the disposition of your assets. Likewise, Trusts control only those assets transferred into the Trust. A Revocable, or Living Trust may be changed during your lifetime, as can a Will, in order to provide for flexibility and changes in circumstances. An Irrevocable Trust cannot be changed, such that serious consideration must be given when using this alternative. There must be coordination between the estate planning document and the manner in which assets are held.
Many assets can pass outside a Will or Trust, but must be considered as part of the total plan; such assets often comprise part of the taxable estate. For example, life insurance policies and retirement plans allow for beneficiaries to be designated. In Rhode Island, jointly-held financial accounts will likely go directly to the surviving account owner. This is fine so long as it is what you want and so long as the potential resultant tax is taken into account.
Consideration should also be given to estate tax consequences of any estate plan. As of January 1, 2014, the exclusion amount for Federal Estate Taxes is $5.34 million dollars and is indexed for inflation in subsequent years. There is an unlimited marital deduction for assets passing to a decedent’s spouse. For 2014, Rhode Island does not tax Estates of less than $921,655.00 and there is also an unlimited marital deduction. However, a Rhode Island Estate Tax Return must still be filed even for Estates for which there is no Rhode Island Estate Tax. If you want to save taxes for your children or protect your spouse, competent professional advice and planning is essential.
Are there special circumstances in the family, such as a child with special needs or a spouse who may be exhibiting early signs of dementia? Is there a favorite charity that you would like to benefit directly or in a back-up position? Is it necessary to provide for financial management expertise? Do you need to protect assets from creditors or others?
The Will and Living Trust can be prepared to address these issues and more. They provide flexibility and can help save estate taxes, if that is a goal. At Moore, Virgadamo & Lynch, Ltd. we have been assisting families in creating and updating estate plans. We look forward to helping you. There is no one right answer for everyone. We can assist in finding the right answer for you.
The starting point requires you to gather information concerning all assets in which you have an interest to consider where you want these assets to end up. Who will you appoint to carry out your plan as executors or trustees? Who should be appointed as the guardian for your minor children?
There are many decisions to be made, decisions which should not be left to others. Please contact us so that we can assist you in devising a plan that meets your goals and objectives. As part of your planning, we can assist with health care directives, such as Durable Health Care Powers of Attorney, as well as General Durable Powers of Attorney.